2011/12 Season End Results
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At the Annual General Meeting of The Hong Kong Jockey Club today (5 September), Voting Members re-elected four Stewards to the Board for further terms of three years each until the AGM of 2015.  They are Mr Anthony W K Chow, SBS JP; Dr Christopher Cheng Wai Chee, GBS JP; Mr Michael T H Lee, JP; and The Hon Sir C K Chow.

Following the Meeting, the new Board of Stewards re-elected Mr T. Brian Stevenson, SBS JP as Chairman and Dr Simon S O Ip, CBE JP as Deputy Chairman for 2012/13.

Earlier Mr Stevenson, reviewing the highlights of 2011/12 (financial year ending 30 June 2012), told the Club's Voting Members that the Club's total direct return to the community had reached a record HK$19.06 billion, adding together the Club's betting duty and tax payments, its charitable donations and its contributions to the Lotteries Fund, all of which also set new records.

He also noted that this huge contribution was before taking into account the many other benefits the Club created for Hong Kong through employment, tourism and related spending.  "It has been a most successful year for the Club and that, of course, converts to a very successful year for the wider community of Hong Kong," he observed.

"These achievements underline the huge value created for Hong Kong by the Club's not-for-profit business model, which serves as a force for good by converting the public demand for sporting and betting entertainment into widespread community benefits."

In total, the Club's net margin on racing, football betting and the Mark Six was HK$8.11 billion, a 6.2% increase on the previous year. Net margin is the amount with which the Club is able to cover operational costs and charitable donations, after payment of dividends to customers and betting duties to Government.

Total tax payments, including betting duties and profits tax, grew 5.4% to a record HK$16.17 billion.  This equates to 6.8% of all taxes collected by the Inland Revenue Department during the year, maintaining the Club's position as Hong Kong's largest single taxpayer.  In addition, the Mark Six operations generated a HK$1.15 billion contribution to the Government's Lotteries Fund, which supports social welfare projects.

The Club's donations to charitable and community projects through The Hong Kong Jockey Club Charities Trust likewise set a new record at HK$1.73 billion, a 6.6% increase on last year's HK$1.62 billion.  The Trust supported 155 different charitable and community projects – a 36% increase on the previous year's 114 – which will ultimately touch the lives of an estimated 5.4 million Hong Kong people.

Noting that the Trust's charitable donations had now increased by 70% over the past nine years, Mr Stevenson said it was no coincidence that this aligned with the decision by the Government and the Legislative Council to introduce regulated football betting in 2003, as a means of combating rampant illegal gambling on the sport.  By providing a legal, reliable and one-stop channel for football betting in Hong Kong, he observed, the Club had been able to minimise this leakage of revenue and convert the local demand into real community benefits.

Horse racing remained the key source of revenue in 2011/12, with financial year turnover growing by 2.6% and the Club's net margin by 1.3%.  However, only 81 race meetings fell into this financial year while the previous year covered 85.  On a direct season-by-season comparison, with 83 meetings in each, turnover grew 7.1% and net margin by 5.6%.  Betting duty payments to Government increased by 6.3% and passed HK$10 billion for the first time since 2001/02.

Encouragingly, total racecourse attendance also increased to nearly two million, the highest for eight years.  Average attendance was up 3.9%.  "With most racing jurisdictions around the world seeing steady declines in turnover and customer base, Hong Kong continues to defy the falling global trends in the sport," Mr Stevenson commented.

"The positive results we're now seeing are a testament to the Club's systematic approach to revitalising racing through a holistic customer segmentation strategy and to developing interest in the sport among a new generation of racegoers, plus our continued enhancement of racecourse facilities."

The Club's overseas race simulcasts continue to attract a growing following, in line with the globalisation of horse racing which has led to strong customer interest in following top horses running overseas.  Net margin on simulcasts during the season grew 20.4% to HK$59 million while duty payments to Government grew 20.3% to HK$219 million.

"There is huge demand from our customers for further overseas simulcasts, but currently we're constrained from fulfilling this demand – and from generating more public funds – by the continued highly inflexible regulations," Mr Stevenson noted. 

For football betting, boosted in the closing month by the Euro 2012 tournament, the Club's net margin grew 10.7% to HK$3.94 billion, generating betting duty payments to Government of the same amount.  Although this was a good result, Mr Stevenson observed, the Club still faced very aggressive competition from illegal and offshore bookmakers, as evidenced by the multi-million dollar police seizures of illegal bets during Euro 2012.

The Mark Six lottery saw encouraging 12.0% growth in turnover during the year with duty payments increasing to HK$1.92 billion and contributions to the Lotteries Fund account for a further HK$1.15 billion.  The Club's net commission was HK$462 million.  Mr Stevenson said the Club's considerable efforts since 2010 to revitalise the Mark Six were now paying off.

"The wider benefits to society of this revitalisation strategy are well illustrated by a recent HK$900 million grant from the Lotteries Fund to refurbish Hong Kong's 250 public elderly centres, announced by the Government in this year's Budget," he commented.  "Our Charities Trust has agreed to complement this with a further HK$110 million grant for a Jockey Club Elderly Facilities Modernisation Scheme, which will provide upgraded facilities and special equipment at the refurbished premises.  Some 200,000 senior citizens are expected to benefit from this collaboration."

Outlining some of the other diverse projects supported in 2011/12 by the Club's Charities Trust in the areas of community services, medical and health, education and training, sports and recreation, and arts and culture, Mr Stevenson said the Club was not only contributing greatly to Hong Kong nowadays but also to the wider nation, for example through its HK$1 billion contribution to Sichuan reconstruction projects and its creation of equestrian venues for the Beijing 2008 Olympics and Guangzhou 2010 Asian Games.

"We could do more in other areas, too, given the opportunity, but it must be accepted that we are living in a rapidly changing market environment and the Club's continued success can never be taken for granted," Mr Stevenson cautioned.  "This year's positive results should not be allowed to obscure the significant challenges we face going forward."

Mr Stevenson explained that billions of dollars in local citizens' spending on gaming that could be benefiting Hong Kong were now going instead to casino operations in the region, online and offshore bookmakers – or worse still the illegal market which is associated with social ills like credit betting, loansharking, underage gambling and corruption.  Of particular concern were the casino junket operators who were allowed to operate freely in Hong Kong and were very aggressive in targeting local citizens.

"If we are to keep this gaming demand in Hong Kong and channel it into community benefits, it's critical that the Club is able to compete on a level playing field," he stressed.

"In my view, there is still a lack of understanding in some quarters of the huge and diverse role the Club plays in Hong Kong community life, and of the indivisible link between regulated betting services and community benefits.  I hope that the advent of a new administration and a new legislature this year will bring with it fresh appreciation of how the Club can help Hong Kong continue to prosper in the challenging years ahead.  The Club and its successful not-for-profit business model is something that all Hong Kong people should cherish."

The Hong Kong Jockey Club's 2011/12 Annual Report can be downloaded from the HKJC website at http://corporate.hkjc.com/corporate/operation/english/annual-11-12.aspx.

The Hong Kong Jockey Club

Founded in 1884, The Hong Kong Jockey Club is not only one of the world's leading horse racing organisations but also a world top 15 charitable organisation and Hong Kong’s largest community contributor, donating HK$1.7 billion in 2012. It is also a major taxpayer, Hong Kong's single largest by far, generating over HK$16 billion a year for public funds. The Club pioneers technology applications for sporting and betting entertainment, striving for the highest levels of customer service. As a membership club, it is recognised as one of Asia’s most prestigious, with more than 23,000 members. These multifaceted roles make it a well-respected and remarkable organisation, dedicated to its mission of enhancing the quality of life for all Hong Kong people.

Season-end figures of The Hong Kong Jockey Club

(A) Business Figures

1a. Horse Racing ($million) – by Financial Year (1 July 2011 – 30 June 2012)

 

2011/12

2010/11

% Change

Turnover*

84,019

81,924

+2.6%

Betting Duty

9,905

9,735

+1.7%

Club's Net Margin

3,709

3,663

+1.3%

* 81 race meetings in 2011/12 vs 85 race meetings in 2010/11

1b. Simulcast racing ($million) – by Financial Year (1 July 2011 – 30 June 2012)

      (included in 1a)

 

2011/12

2010/11

% Change

Turnover**

1,621

1,308

+23.9%

Betting Duty

219

176

+24.4%

Club's Net Margin

59

47

+25.5%

** 103 simulcast races in 2011/12 vs 97 simulcast races in 2010/11

1c. Horse Racing ($million) – by Racing Season

      (11 September 2011 – 15 July 2012; 5 September 2010 – 10 July 2011)

 

2011/12

2010/11

% Change

Turnover***

86,117

80,413

+7.1%

Betting Duty

10,159

9,557

+6.3%

Club's Net Margin

3,795

3,594

+5.6%

*** 83 race meetings in both seasons

1d. Simulcast racing ($million) – by Racing Season (included in 1c)

      (11 September 2011 – 15 July 2012; 5 September 2010 – 10 July 2011)

 

2011/12

2010/11

% Change

Turnover****

1,621

1,357

+19.5%

Betting Duty

219

182

+20.3%

Club's Net Margin

59

49

+20.4%

**** 104 simulcast races in 2011/12 vs 99 simulcast races in 2010/11

2. Football Betting ($million) – by Financial Year (1 July 2011 – 30 June 2012)

 

2011/12

2010/11

% Change

Turnover

47,285

39,763

+18.9%

Betting Duty

3,940

3,560

+10.7%

Club's Net Margin

3,941

3,560

+10.7%

3. Lottery ($million) – by Financial Year (1 July 2011 – 30 June 2012)

 

2011/12

2010/11

% Change

Turnover

7,693

6,866

+12.0%

Lottery Duty

1,923

1,716

+12.0%

Payment to Lotteries Fund

1,154

1,030

+12.0%

Club's Commission

462

412

+12.0%

(B) Club's Contribution

1a. Betting Duties and Profits Tax ($million) – by Financial Year (1 July 2011 – 30 June 2012)

 

2011/12

2010/11

% Change

Racing Betting Duty

9,905

9,735

+1.7%

Football Betting Duty

3,940

3,560

+10.7%

Lottery Duty

1,923

1,716

+12.0%

Profits Tax

405

328

+23.5%

Total

16,173

15,339

+5.4%

1b. Betting Duties and Profits Tax ($million) – by Racing Season

      (11 September 2011 – 15 July 2012; 5 September 2010 – 10 July 2011)

 

2011/12

2010/11

% Change

Racing Betting Duty

10,159

9,557

+6.3%

Football Betting Duty

3,940

3,560

+10.7%

Lottery Duty

1,923

1,716

+12.0%

Profits Tax

412

322

+28.0%

Total

16,434

15,155

+8.4%

2. Donations by The Hong Kong Jockey Club Charities Trust ($million)

    by Financial Year (1 July 2011 – 30 June 2012)

 

2011/12

2010/11

% Change

Total

          1,729

1,622

+6.6%

(C) Impact of 2006 Betting Duty Reforms on Club and Government revenues

1a. by Financial Year ($million) (1 July – 30 June)

 

Total racing turnover

Club's Net Margin

Government's share

(betting duty)

2005/06 (pre-reform)

59,032

3,207

7,806

2006/07

63,860

2,901

8,031

2007/08

66,791

3,105

8,178

2008/09

67,653

3,126

8,228

2009/10

71,647

3,230

8,538

2010/11

81,924

3,663

9,735

2011/12

84,019

3,709

9,905

Overall growth since reforms

42.3%

15.7%

26.9%

1b. by Racing Season ($million)  

 

Total racing turnover

Club's Net Margin

Government's share

(betting duty)

2005/06 (pre-reform)

60,050

3,262

7,943

2006/07

64,000

2,899

8,039

2007/08

67,685

3,148

8,286

2008/09

66,820

3,085

8,120

2009/10

75,497

3,398

9,002

2010/11

80,413

3,594

9,557

2011/12

86,117

3,795

10,159

Overall growth since reforms

43.4%

16.3%

27.9%

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